Govt's economic team reviews budget proposals
With crucial meetings of the National Economic Council (NEC) and the federal cabinet lined up for the next few days, the government firmed up budget proposals, including targets for taxation measures, for 2019-20. Sources said a meeting presided over by Prime Minister's Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh discussed various proposals that could create a revenue cushion of about Rs1.45 trillion in the next fiscal year, taking the year's revenue target to Rs5.55tr from a dismal Rs4.2 trillion.
There was a general agreement that over Rs700 billion in additional revenue has to come from two areas - sales tax and income tax. The meeting also discussed some proposals for increasing general sales tax by 1 per cent or 1.5pc to yield over Rs350bn. A member of the Federal Board of Revenue (FBR) underlined the need for reverting to an income tax regime in force before Miftah Ismail's tenure as finance minister, by reducing exemption levels on income tax and increasing tax rates. (The PML-N's finance minister had increased income tax exemption to Rs1.2 million from Rs0.4m and drastically reduced rates for all other incomes).
However, a majority of the functionaries did not agree to the proposal for total reversal of the existing regime and said the income tax burden should be kept low for those earning less than Rs10m. The NEC, led by the prime minister and featuring representations from the provinces, is the country's highest decision-making body on economic policy and has been called to meet on May 29 (Wednesday) to approve next year's macroeconomic framework and development programme. A meeting of the cabinet will be held on May 28 to approve a budget strategy paper for the next year whose broad contours would be shared with the NEC.
According to an official statement, it was because of these two high-profile meetings that Dr Shaikh "reviewed the budget proposals". FBR chairman Shabbar Zaidi made a presentation about the budget proposals and suggested steps for expanding the tax base in line with the Rs5.55tr revenue target given to him by the government.
Dr Shaikh instructed the FBR to make the tax collection process easy and initiate measures to widen the tax net. The meeting was attended also by Adviser to the PM on Commerce, Textile, Industry, Production and Investment Abdul Razak Dawood and Minister of State for Revenue Hammad Azhar.